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Markets Live: Greece weighs on local shares

Australian shares finished lower, weighed by losses in top miners and energy firms as concern over economic growth in Europe and the United States revived risk-aversion. Early losses deepened after Greece's international lenders failed for a second week running to agree how to get the country's debt down.

5.12pm: Western Australia may give producers of magnetite iron ore a concession on royalty rates in a bid to jumpstart projects stalled by a recent slump in the steel-making raw material.

Magnetite ore is a low grade that requires expensive processing before being exported, making such projects much harder to justify, compared with the ore produced by giants Rio Tinto and BHP Billiton.

Premier Colin Barnett said the state, which produces nearly all of Australia's iron ore, would consider lower royalty rates in the start-up phase of magnetite projects, but the plan still needed to be approved.

"We will sit down with each of the iron ore producers and discuss with them and provide a royalty concession through the initial start-up stages," Barnett told a conference in Perth.

5.03pm: Some stocks today:

Mmineral sands firm Iluka dropped 2.8 per cent. The company was the best performer among the larger ASX companies last year, but has since plummeted 53 per cent from a January high of $18.88 due to its exposure to slower Chinese growth.

Freight rail company QR National was 1 cent higher at $3.49 after it said it expects to haul just enough coal this financial year to meet its previous forecasts.

4.54pm: While shares may still have a few more wobbles in the near term, we remain of the view that shares will end the year higher and continue to move up, albeit with occasional setbacks, next year, says Shane Oliver, strategist at AMP Capital.

"One dampener though remains the strong Australian dollar which continues to make life tough for Australia companies and which makes it hard to be confident that Australian shares will outperform global shares."

4.44pm: For years, brokers have been telling their clients to take their money out of Telstra, there are better opportunities elsewhere.

Now, even with its shares at their highest level since 2008, some brokers reckon its time to buy, that it could run to $4.66, from $4.19 at the close of trade today. Take Charlie Aitken, the influential commentator at Bell Potter:

The more stocks like TLS edge up, the more questions we get about whether it’s time to take some profits in TLS. That’s a natural reaction in a stock that is +64% off its lows 2 years ago and has paid 56c in ff divs in that period.

My answer is it is not time to take profgits in TLS. It's time to buy more. What most people forget is TLS is turning around operationally.

The stock has entered an EPS (and eventually DPS) upgrade cycle. Over the past two years TLS has captured over 90 per cent of the net new customer additions in the Australian mobile and broadband.

The company is completely dominated customer additions due to its massive, structural network advantage, an advantage further cemented by 4G.

This will lead to consensus upgrades from analysts over the years ahead as TLS is capturing these new customers not by discounting services, but simply by the reliability and speed advantage of their networks vs. their capital constrained competitors.

4.30pm: The Australian dollar lost ground against a broadly stronger US dollar on after eurozone officials failed to reach an agreement about Greece, but hovered near seven-month highs against the yen.

The Australian dollar slipped to $US1.0352 from $US1.0384, after Greece's international lenders failed for the second week running to agree on an aid package.

Support for the dollar was found at $US1.0339, Monday's low, with initial resistance at $US1.0394.

Investors were awaiting HSBC China Flash PMI data tomorrow for further signs of recovery for the Chinese economy.

"Recent data is suggesting we may get a figure above 50 and that would be very good for the Aussie dollar and risk assets in general," said David Scutt, a trader at Arab Bank Australia.

He said the local currency could rise to $US1.0445, last week's peak, depending on the European market reaction to the Greek deal setback.

Telecommunications and consumer staples posted modest gains, both up 0.2 per cent.

4.12pm: The market has finished lower, weighed down by eurozone finance ministers failing to come to an agreement over Greek's debts. The benchmark S&P/ASX200 fell 16.2 points, or 0.4 per cent, to 4369.5, while the broader All Ords dropped 16.8 points, or 0.4 per cent, to 4390.7.

3.56pm:BusinessDay's Michael Pascoe has filed with his spin on Australian retail, is it really as bad as we think?

Here we go again, confusing the health of the Australian economy with retail sales figures in general and the fate of David Jones and Myer in particular. Ah, the persuasive illusions that are Miranda Kerr and Jennifer Hawkins.

Department stores make up the smallest of the six broad categories by which the Australian Bureau of Statistics measures retail sales – contributing just 7 per cent of the total. The clothing and footwear category is larger, and gambling turnover is bigger again than that.

And within the department-store category, DJs and Myer bring in less than K-Mart, Big W and Target. Only in the public's perception do they loom larger.

Thankfully, the sales performances of our two mid-market department stores are not indicators of the health of the Australian economy or even of the retail industry.

3.37pm: More on the sharp drop after 2pm, Westpac’s global head of interest rates strategy and international markets, Russell Jones, said the slump in shares was due to Australia importing more bad news from Europe.

“The meeting of European finance ministers broke up without a meaningful deal of the Greek bailout coming through. I think the markets are expressing their disappointment with that,” he said.

“It’s clearly proving very difficult to get any kind of consensus on a long-term solution to Greece’s problems.”

Mr Jones said things were unlikely to pick up any time soon.

“For the moment at least, we’re in a situation where all the international news is troubling. You’ve not just got Europe failing to address its problems, but you’ve got all the uncertainties around US budget position,” he said.

“Maybe what we need is for Mr Stevens to cut rates in December.”

3.29pm: It looks as though there has been a significant drag on the market in the last hour, BHP is the heaviest weight on the ASX, responsible for the loss of 3.19 points. CSL is contributing a 2.76 point drop and Santos is accounting for a 1.28 point fall.

3.14pm:Greece's international lenders failed for the second week running to agree how to get the country's debt down to a sustainable level and will have a third go at resolving their most intractable problem in six days' time.

After nearly 12 hours of talks through the night during which myriad options were discussed, euro zone finance ministers, the International Monetary Fund and the European Central Bank failed to reach a consensus, without which emergency aid cannot be disbursed to Athens.

2.56pm: The ASX200 has slumped to the day's lows, down 0.3 per cent. Leading the falls are the energy sector, down 1.4 per cent, and materials, down 0.4 per cent.

2.49pm: Gold is trading steady, lacking conviction to move out of its recent trading range as investors eye truce talks over Gaza and discussions on how to avert a fiscal crisis in the world's top economy.

Spot gold was little changed at $US1726.60 an ounce.

Gold has settled in a range between $US1700 and $US1740 an ounce in the past two weeks, after the re-election of US President Barack Obama cheered gold buyers who expect a continued loose monetary policy to keep gold attractive as an inflation hedge.

"Gold seems well supported towards the $US1700 level, and the longer-term story hasn't changed much," says Nick Trevethan, senior commodity strategist at ANZ in Singapore, adding that continuously robust demand from China and official sector buying will help support bullion prices.

2.25pm: There is no strong evidence of hot money inflows in China despite a recent rally in the yuan, which has been driven by improved market sentiment, the country's foreign exchange regulator said on Wednesday.

The yuan has gained almost 2.6 percent against the dollar from late July.

"Due to the combined effect of both domestic and external factors, the market sentiment has recently turned optimistic from pessimistic, leading to a rally of yuan exchange rate," the State Administration of Foreign Exchange (SAFE) said in a statement on its website.

2.10pm: Continuing on the subject of retailers, here's something from the small business team:

Ten years ago if you went to your nearest regional shopping centre you would, on average, have been able to choose between three photo shops. Now you are likely to see no more than one. In smaller centres you would be lucky even to get that.

While most of these kinds of retailers have been party to a mass vanishing trick, others like them are attempting something trickier still - to transform themselves into new, leaner and more differentiated businesses that are fit to prosper in the future.

1.58pm:November and December are the deadliest times of the year in Victoria’s workplaces, with seven deaths coming in a 12-day period in 2011, WorkSafe has warned.

The state’s work safety watchdog said the rush to finish jobs before the Christmas break often led to shortcuts that could prove fatal.Twenty-six workers have died during November and December over the past five years.

WorkSafe health and safety director, Ian Forsyth, said he fears a repeat of the deadly end to the 2011 working year.

1.45pm: Major markets around the region are slightly up, but most aren't showing large gains.

Nikkei(Japan): +1.1%

Shanghai: +0.2%

Taiwan: +0.1

South Korea: +0.2%

Singapore: +0.3%

New Zealand: flat

1.29pm:David Jones chief executive Paul Zahra said the department store's website meltdown last night was a good learning experience for the company which plans to launch its clearance sales online on Christmas day, when most of its physical stores are closed.

‘‘We’ve only been in business for a couple of weeks, we’ve had double the visitors and three times the sales,’’ Mr Zahra said.

‘‘Yesterday was unprecedented, we were completely overwhelmed, the site simply went into meltdown and could not cope with the traffic which caused the outage.’’

He described the experience as ‘‘a really good dry run for us when we go into clearance’’ which will start on Christmas day with its web site clicking over from pre Christmas mode to clearance sales which traditionally started when its stores re-opened on Boxing Day.

‘‘That puts us at a great advantage compared to this time last year,’’ Mr Zahra said.

1.13pm: The Australian government has sold $600 million of July 15 2022 Treasury bonds.

The Australian Office of Financial Management (AOFM), which conducts bond auctions on behalf of the government, said the bonds were sold for a weighted average yield of 3.13 per cent.

1.05pm: A further development in the Hewlett-Packard affair, the FBI, responding to an inquiry by the US Securities and Exchange Commission, is looking into HP ’s allegations of accounting improprieties at Autonomy, a person familiar with the matter said.

HP said it discovered "serious accounting improprieties" and "a willful effort by Autonomy to mislead shareholders," after a whistleblower came forward following the May ousting of former Autonomy Chief Executive Mike Lynch.

The news sent the company's shares plunging 12 percent to a 10-year low of $US11.71. HP, which for decades was synonymous with technical excellence and innovation as one of the bedrock companies of Silicon Valley, now has a market value of roughly $US20 billion, down from $US155 billion in April of 2000.

12.51pm: Oil and gas explorer Drillsearch Energy has forecast a revised four-fold jump in production in 2013 that will help its transition into a mid-tier producer.

The central Australian Cooper Basin-focussed company is forecasting production of 1.31 million to 1.57 million barrels of oil equivalent (BOE) in fiscal 2013, higher than previous guidance of 1.23 million BOE.

It produced 389,877 BOE this year.

The growth would come from the company’s oil rather than gas business, with it bringing the Bauer oil field in the Cooper Basin into production this year, managing director Brad Lingo told shareholders at the company’s annual general meeting in Sydney.

12.45pm: Heading into lunchtime and the markets are down a bit, but not a lot. The All Ordinaries index is 5.1 points lower, or 01 per cent, to 4402.4, while the benchmark S&P/ASX200 is 3.5 points lower, or 0.1 per cent, to 4382.2.

In recent trade, the dollar was at $US1.0380, down from $US1.0414 yesterday afternoon.

ANZ foreign exchange strategist Andrew Salter said the currency traded in a tight range with markets were waiting for international developments including a meeting of euro zone finance ministers in Brussels to discuss Greece’s debt, the fiscal cliff in the US, and the conflict in the Middle East.

[The dollar is]very stable, its trading in a very narrow range. [It's] still captive to international factors. We’re waiting for the resolution of some international events.

12.30pm: Back to the markets where the big banks are a bit mixed:

CBA is 0.09% higher to $57.965

ANZ is 0.28% higher to $23.605

NAB is 0.17% higher to $23.73

Westpac is 0.16% lower to $24.65

12.22pm: The man some commentators had dubbed ‘Britain's Bill Gates' is struggling to protect his reputation.

“Lynch was the poster child in the sense that he was considered the Bill Gates of the UK and the allegations damage his reputation,” said Espirito Santo Investment Bank analyst Vijay Anand.

12.09pm: Internet job adverts rose 2.5 per cent in October. The government's internet vacancy index rose to a seasonally adjusted 70.7 points - a good climb but still 14.1 per cent lower than a year ago.

The strongest monthly increase was for labourers, rising by 6.4 per cent, followed by a 5.5 per cent rise in sales workers.

Vacancies largely concentrated on NSW and Victoria - rising by 6.9 per cent and 5.4 per cent respectively

11.59am: More from the QR National annual general meeting, where chairman John Prescott has hit out at claims that Australia’s largest rail operator has used accounting changes in order to boost the bonuses of its senior executives.

As BusinessDay’s Matt O’Sullivan reports the board faces a backlash against its executive-pay report at the annual meeting after proxy adviser Ownership Matters and the Australian Shareholders’ Association urged a 'no' vote.

Mr Prescott told shareholders that the changes made to the executives’ remuneration were not ‘‘merely accounting adjustments that give our executives a free kick’’.

Contrary to what you may read in the media, these are not simply end-of-year adjustments. Quite frankly, they’re what we expect management to do to enhance shareholder value.

The Rio Tinto-controlled miner has announced a three-for-10 renounceable rights issue at 48 cents a share.

Ivanhoe’s major shareholder Turquoise Hill, which is half owned by Rio, has agreed to take part, providing $40 million towards the capital raising.

Ivanhoe’s chief executive Ines Scotland said the capital raising will allow the company to pay off a loan from Turquoise Hill:

The entitlement offer will strengthen Ivanhoe Australia’s balance sheet and, together with operating cash flows from the Osborne project, ensure that the company is fully-funded for planned operations and exploration.

Ivanhoe’s shares were placed in a trading halt ahead of the announcement. Rio Tinto is down 0.8 per cent at $57.04.

11.48am: While the common wisdom says entrepreneurs must always have a clear exit strategy, the German founders of website-building business Jimdo take a different approach.

Travelling through Australia this month for a mix of work and pleasure, 29-year-old Fridtjof Detzner says he and his two co-owners learnt the hard way that it's better to be your own boss than be beholden to the highest bidder, and they've stuck to their word, recently turning down an eight-figure offer.

11.36am: More from the QR National AGM, which could shape up to be a bit of a controversial event, with a first strike looming for the company's remuneration report and as shareholder activist Stephen Mayne tweets the following:

QR National chair John Prescott is most unimpressive. Too old, too slow. He shouldn't be here given $10b in write-offs when BHP CEO.

11.32am: There's some upbeat news from CBRE, with the commercial real estate firm claiming this morning that prime industrial properties are drawing interest from global investors thanks to rental growth that's recovered to levels not seen since the collapse of Lehman Brothers in 2008.

Values of warehouses and logistics properties in the capital cities are at a four-year high, with the national average at $1261 a square metre.

Perth was the strongest performer, with rents climbing 4.5 per cent in the three months ended Sept. 30 from a year earlier, followed by Melbourne, where rents rose 4.1 per cent.

11.28am: What was Stephen Mayne going on about? The QR National annual general meeting in Brisbane, where the freight rail company’s chief executive, Lance Hockridge, said haulage volumes in the first four months of the 2012/13 financial year had fallen 1 per cent from the same period in the year before.

The fall was due to lower volumes in Queensland, as those in NSW were higher than in the previous corresponding period, he said, adding:

We expect the softer demand environment to continue over the near term. With variable railings over the first four months and the wet season approaching, it is difficult to provide certainty on full-year coal haulage volumes to June 30, 2013. Our best estimate, advised in August, in the range of 195 to 205 million tonnes has not changed. However, experience to date suggests it is likely to be towards the lower end of that range.

11.22am: Stephen Mayne, dinosaurs and trains, all in one tweet:

The dinosaurs in charge of QR National aren't even webcasting the AGM. A $10bn company in the dark ages. Prescott's rem defense laughable.

11.10am Some brighter news out of Tokyo, where the Nikkei share average has risen to a two-month high in early trade, led by exporters, after the yen hit a seven-month low versus the dollar.

The Nikkei advanced 0.8 per cent to 9213.82, while the broader Topix gained 0.8 per cent to 767.85.

11.05pm: Working might be better for you than you'd thought.

A US survey of more than 13,000 people found those who had recently lost their jobs were more likely to suffer a heart attack than their employed peers, in some cases running a risk as high as 35 per cent.

The Researchers found that each successive job loss was tied to a higher chance of heart problems among more than 13,000 older adults, although it's not clear how unemployment itself might have caused the extra heart attacks.

People were especially likely to have a heart attack during their first year of being out of work.

11.00am: Australian stocks are weaker, with falls among the major resources-linked sectors leading the broader market lower.

Heading toward the end oif the first hour of trade, the benchmark S&P/ASX200 index was down 6.2 points, or 0.1 per cent, at 4379.5 points, while the broader All Ordinaries index had fallen 7.1 points, or 0.2 per cent, to 4400.4 points.

Macquarie Private Wealth division director Lucinda Chan said things were quiet, with investors on the sidelines and eyeing the ongoing struggle in the US over the fiscal cliff.

‘‘The market is a little bit sideways,’’ Ms Chan said. ‘‘It looks like there is some sort of agreement, but there is a lot of detail that needs to be worked through, I think, at the end of the day.’’

10.54am: More on the David Jones sales results from BusinessDay's Colin Kruger, who says the result was below the forecasts of some analyst who had tipped a one per cent increase in sales.

‘‘Feedback from unlisted retailers suggests that trading conditions improved in the October quarter with a modest improvement in sentiment assisted by favourable weather and a step change in fashion styles,’’ said Deutsche Bank analyst Michael Simotas.

David Jones shares have come back a bit in recent trade and are now down 0.8 per cent at 2.55

When asked about the impact of the debacle on Westfield - one of the participating retailers - and whether it had a negative impact on its online retail reputation, a spokeswoman would only say that shoppers were able to bypass the Click Frenzy site and go straight to westfield.com.au to take part in the sales.

10.36am: Former Macquarie bank chief executive Richard Sheppard is to join the board of casino operator Echo Entertainment. Mr Sheppard spent more than 30 years with Macquarie, including four years as managing director and chief executive of Macquarie Bank.

He will join Echo Entertainment as a non-executive director once all regulatory approvals are received, Echo chairman John O’Neill said in a statement.

The appointment continues a period of renewal for the company’s board which began with the departure of former chairman John Story in June.

10.33am: Where's the market headed today? Here's one view:

Expecting a similar session to what was seen yesterday on the #XJO. Miniscule volumes leading to a small "up" day on the #market#ausbiz

10.19am: Utilities companies are 0.57 per cent higher, while health stocks are 0.86 per cent lower. Telecoms have gained 0.45 per cent in early trade and consumer discretionary stocks are 0.45 per cent higher.

Materials have lost 0.34 per cent and energy stocks are down 0.28 per cent.

10.14am: In early trade, the All Ordinaries index is 1 point higher to 4406.5, while the benchmark S&P/ASX200 is flat at 4385.7.

10.12am: More on David Jones. Home and electrical product sales continued to struggle, but there was improvement in sales of womenswear, menswear, beauty, accessories and shoes during the first quarter, Mr Zahra said.

Sales grew in Western Australia, NSW and Victoria, but refurbishments at David Jones’ Toowong store in Brisbane impacted Queensland sales, the company said.

Customers had embraced David Jones’ new online store, which was ‘‘well-positioned to capitalise on Christmas and the Boxing Day clearance periods’’, it said.

David Jones’ first quarter sales growth was smaller than Myer’s in the same period.Myer’s total sales in the 13 weeks to October 27 were $688 million, up one per cent on the same period last year.

10.07am: Early take - share are flat. ASX200 is less than one point higher.

10.04am: David Jones shares have opened lower. Down as much as 1.17 per cent in early trade to 2.54 per cent.

9.55am: A bit more here from David Jones. ‘‘Whilst it is still early days, it is pleasing to see the company return to positive sales growth following seven quarters of declining sales,’’ chief executive Paul Zahra said in a statement.

‘‘Trading in the first couple of weeks of the second quarter is tracking broadly in line with (the first quarter).’’

9.53am: The David Jones’ data has arrived. First quarter sales rose by 0.3 per cent and the retailer says second quarter sales are so far following a similar trend.

The department store said sales totalled $415.6 million in the three months from July 29 to October 27, up from $414.3 million in the previous corresponding period.

Like-for-like sales were the same as total sales as there were no store openings or closures in the relevant periods.

9.45am: Some analyst rating changes for today:

Boart Longyear cut to underperform at Macquarie, BBY Ltd

Tatts Group raised to neutral at Nomura

Flexigroup downgraded to neutral at Goldman Sachs

Fletcher Building raised to buy at Deutsche Bank

NAB raised to buy at Deutsche Bank

Arrium raised to hold at Deutsche Bank

9.42am: Also today, David Jones releases first quarter sales results. The data is due out at 11.30am. Investors will be looking for some good news after Myer reported a rise of 1 per cent over the three months to the end of September.

9.35am: Despite US housing starts rose to their highest rate in more than four years in October, suggesting the housing market recovery was gaining steam, Wall Street closed flat after Fed boss Ben Bernanke failed to signal more support for the US economy.

The powerful central bank chief called for a credible long-term framework to put the federal budget on a sound path, but warned against action that would needlessly add to the headwinds facing the economy.

9.32am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

The SPI was 2 points higher at 4400

The $A was trading at $US1.0387

In the US, the S&P500 was flat at 1387.85

In Europe, the FTSE100 added 0.18% to 5748.10

China iron ore lost $US2.20 to $US120.20

Gold added 0.02% to $US1731.70 an ounce

WTI crude oil added $US2.95 to $US86.33 a barrel

RJ/CRB commodities index added 1.63% to 298.35

9.30am: Good morning folks. Welcome to the Markets Live blog for Wednesday.

18 comments

A nice bit of satire / comedy for Turnbull fans from the afr that traders may enjoy...

Commenter

Seriously...

Date and time

November 21, 2012, 7:26AM

Looks like Status Quo would be a good opening act for today's market.

Commenter

4380

Location

Snidery Mark

Date and time

November 21, 2012, 7:29AM

Ohhh, those high frequency traders are at it again, stay away. Hold on to Cash.

Commenter

Dan

Location

Sydney

Date and time

November 21, 2012, 7:34AM

What's the point of David Jones and the other retailers reporting sales revenue when margins are shrinking?

ClickFail just shows that retail in Australia is a mess and has little future. Global suppliers can easily service Australia over the internet. High cost, high rent, high markup. high street retailers are dinosaurs.

Commenter

Allan

Location

Prahran

Date and time

November 21, 2012, 7:44AM

Ya gotta larf, eh?Above states that DJs are blissfully unaware of the chaos of ClickFreezer and are wondering why their electrical goods, et al, are not as strong as expected.

I've got an Epson FX80 they can have if that helps. But seriously, the business model gets completely distorted in a high cost, high overheads environment. More wealthy retirees are what's needed in Australia. Wozniak, Becks, maybe Assad, more British royal family, and a few more Russian oligarchs. They do a lot of shopping.

Commenter

Frenzied out

Location

Nowhere

Date and time

November 21, 2012, 2:22PM

lol with the future contract pointing to the green in the morning, i was hoping it would be nice to give Jonaze a break from ASX disappointment once in a while

Commenter

got brain

Date and time

November 21, 2012, 7:54AM

Another Day another JOKE. 2.30pm ???

Commenter

Jonaze

Location

Sydney

Date and time

November 21, 2012, 12:07PM

Econorat, my comment yesterday that some central banks were "rigging" the Aussie dollar to be higher than it should be was merely meant as a figure of speech, hence the quotes. By the way there has been comment by the RBA and others on central banks buying the Aussie and also talk at various times during the year that it is a bit on the high side, most recently by an ANZ analyst. This is not good for the economy as a genlte easing at this time to reflect changes in commodity prices etc would be helpful., It also concerns me that a certain gas giant may have an interest in keeping our dollar on the high side. Maybe I'm just being paranoid

Commenter

Catch 22

Date and time

November 21, 2012, 9:45AM

Catch22,Hard to read it as a figure of speech, but I'll take your word for it.The analyst stated that the AUD is on the high side but he thought it would take several years for it to come off those highs.You have to be aware though that it is all relative, we are relatively higher against the greenback and the Euro, but still on par with the Canadian dollar and several of our asian trading partners.So in effect, the high AUD is really a comment on the basket case that Europe is, and will continue to be but we should see some relief as the Greenback slowly recovers